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ESG INVESTING


COMPANIES IN THE CHOCOLATE INDUSTRY EMBRACE ESG AND SUSTAINABLE FOOD PRODUCTION

By: Tiffany Robertson

agriculture technology climate change mitigation emerging markets Sustainable
Development Goals

July 26, 2022


In March 2022, impact investor Blue Horizon


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announced its investment in California Cultured


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, a company that grows chocolate from cocoa stem cells as opposed to
traditionally farmed cocoa. This investment follows similar moves to transform
food production in other industries, such as meatless meat and coffee. As
climate change impacts cocoa crops and chocolate producers face pressure to
address ESG issues in traditional farming, companies like California Cultured
see a bright future for sustainable food production, and so do investors.


CELL-BASED FOOD INDUSTRY SEES GROWTH

Blue Horizon is not the only strategic investor interested in California
Cultured. Cult Food Science


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also added the company to its cell-based food portfolio, as did Japanese
chocolate company Meiji


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and Agronomics


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.

Such investments indicate a growing interest in the $1 billion cell-based
agricultural sector


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, with one 2021 study


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showing that cell-cultivated meat could make up about 40% of future meat intake.
As a result, a variety of food tech companies


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worldwide are developing cell-based production methods to create sustainable
alternatives to traditionally produced food and derivative products.

Other companies delving into cellular agriculture and sustainable food
production include:

 * VitroLabs:
   
   
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   Creates lab-grown leather “that’s simply more humane and more sustainable”

 * BlueNalu
   
   
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   : Grows whole-muscle, cell-based seafood

 * Wilk
   
   
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   : Develops both animal and human milk cultured from mammary cells, for a 100%
   farm-free product

 * Aleph Farm
   
   
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   s
   
   
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   : Debuted the world’s first cell-based steak in 2018 and continues to develop
   “a new way to steak.”

> Cellular agriculture aims to circumvent or eliminate child slavery,
> deforestation, and climate change by growing cocoa cells in a lab


SUSTAINABILITY ISSUES PERSIST IN THE CHOCOLATE INDUSTRY

Four countries—Côte d’Ivoire, Ghana, Nigeria, and Cameroon—produce around
three-quarters of the world’s cocoa supply


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, about 95% from smallholder farmers


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. Cocoa farmers tend to be poor, receiving only 7%


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of end profits. Furthermore, child labor and even slavery


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remains a long-standing issue in the cocoa industry, often with major suppliers


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like Cadbury.

Deforestation and climate change also threaten the sustainability of the cocoa
industry in these countries. Côte d’Ivoire—the largest cocoa exporter at 2.2
million tons every year


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— lost 80% of its biodiversity-rich forests


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in the past half century, while higher temperatures and drought affect crop
viability. The governments of Côte d’Ivoire and Ghana and 35 leading cocoa and
chocolate companies formed the Cocoa & Forests Initiative


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to end deforestation and restore forest areas.

Cellular agriculture aims to circumvent or eliminate many of these issues by
growing cocoa cells in a laboratory


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. These cells are then harvested, fermented, roasted for flavor, and turned into
a variety of cocoa products. While research on the climate impact of cellular
agriculture in the chocolate industry is scant, a 2021 report


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on meat found that cellular agriculture benefits the planet by reducing:

 * global warming by 92%
 * land use by 95%
 * water use by 78%


ESG ISSUES TO ADDRESS IN CHOCOLATE PRODUCTION

Decades after the chocolate industry made voluntary commitments


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to end child slavery in supply chains, scrutiny for unethical production
practices persists. Increasing demands for sustainable food production and
corporate action against climate change also have manufacturers considering
their sustainability plans more closely.

According to a 2020 report


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, the future of the chocolate industry may depend on manufacturers identifying
all their suppliers and tracing the source of their commodities to better
understand the environmental and human rights risks associated with their supply
chain. Over half of companies surveyed aimed to achieve traceability of
deforestation or human rights abuses at the individual farm level. Once
identified, the report encourages corporate engagement with smallholder
producers who often need additional financial or technical resources to comply
with corporate commitments.

Any company, security, fund or other investment identified herein is provided
solely for illustrative purposes and should not be construed as a recommendation
or solicitation for the purchase or sale of any such investment. By clicking on
a weblink included in the above article, you may access a website operated by a
third-party. Please review the website’s terms of use and privacy policy upon
entering the site. We are not responsible for any content, links, products or
services available on third-party websites.


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